Because fixed income can never produce the gains other assets can
you would have to really cherry pick to find longer periods of time Equities didn’t blow fixed income away
Hah!
Yes, I accept that. The attraction of fixed income accounts is that they require a smaller leap of faith than equities, so there's that as an emotional hook.
Yes, it most certainly does need to be diversified. The irony is that when young and starting with very little, you're temped to go for home run positions, all in. >20% return--much more, hopefully.
This has only worked for me in RE, and then not always.
What many people may not realize is that as you acquire a comfortable amount of assets, and you do not need as high a rate of return (6-8% on 1.5M is quite satisfactory, whereas you wanted >20% on 50K), you can then diversify easily, creating a sort of reinforced financial foundation for yourself/family. This is very desirable for the long run.
So I don't know about the the poor, but yes, the rich get richer, unless they screw up big-time or have CATASTROPHIC luck.
Hah! This Christmas eve, after a dinner with a bunch of friends of ages varying between 75 (me) and 40, the conversation came around to "when would a person feel like they had enough"? The 40 year old guy--a very reasonable and insightful sort--asked me if I had 10M wouldn't that be enough? Wouldn't that be enough for anyone, to just step back and enjoy?
So he asked me if I had 10M right now, what would I do.
It didn't take long to admit to him that I'd try to make it 75-100% greater within the remainder of my life. It should be far easier than getting the first 10M.
It'll never be any different for me, I'm afraid.